Ans. Goods and Services Tax Network (GSTN) is a nonprofit
non-government company, which will provide
shared IT infrastructure and service to both central
and state governments including tax payers and other
stakeholders. The Frontend services of registration,
Returns and payments to all taxpayers will be provided by
GSTN. It will be the interface between the government and
the taxpayers.
Q 2. What is the genesis of GSTN?
Ans. The GST System Project is a unique and complex
IT initiative. It is unique as it seeks, for the first time to
establish a uniform interface for the tax payer and a
common and shared IT infrastructure between the Centre
and States. Currently, the Centre and State indirect tax
administrations work under different laws, regulations,
procedures and formats and consequently the IT systems
work as independent sites. Integrating them for GST
implementation would be complex since it would involve
integrating the entire indirect tax ecosystem so as to
bring all the tax administrations (Centre, State and Union
Territories) to the same level of IT maturity with uniform
formats and interfaces for taxpayers and other external
stakeholders. Besides, GST being a destination based tax,
the inter- state trade of goods and services (IGST) would need a robust settlement mechanism amongst the States
and the Centre. This is possible only when there is a strong
IT Infrastructure and Service back bone which enables
capture, processing and exchange of information amongst
the stakeholders (including taxpayers, States and Central
Government, Bank and RBI).
This aspect was discussed in the 4th meeting of 2010
of the Empowered Committee of State Finance Ministers
held on 21/7/2010. In the said meeting the EC approved
creation of an ‘Empowered Group on IT Infrastructure
for GST’ (referred as EG) under the chairmanship of
Dr. Nandan Nilekani along with Additional Secretary
(Rev), Member (B&C) CBEC, DG (Systems), CBEC, FA
Ministry of Finance, Member Secretary EC and five state
commissioners of Trade Taxes (Maharashtra, Assam,
Karnataka, West Bengal and Gujarat). The Group was
mandated to suggest, inter alia, the modalities for
setting up a National Information Utility (NIU/ SPV)
for implementing the Common Portal to be called GST
Network (GSTN) and recommend the structure and terms
of reference for the NIU/ SPV, detailed implementation
strategy and the road map for its creation in addition to
other items like training, outreach etc.
In March 2010, TAGUP constituted by the Ministry of
Finance had recommended that National Information
Utilities should be set up as private companies with a
public purpose for implementation of large and complex
Government IT projects including GST. Mandate of TAGUP
was to examine the technological and systemic issues relating to the various IT projects such as GST, TIN, NPS,
etc.
The EG had seven meetings between 2nd August 2010
and 8th August 2011 to discuss the modalities. After due
deliberations, the EG recommended creation of a Special
Purpose Vehicle for implementing the GST System Project.
To enable efficient and reliable provision of services in a
demanding environment, the EG recommended a non-
Government structure for the GSTN SPV with Government
equity of 49% (Centre – 24.5% and States – 24.5%) after
considering key parameters such as independence of
management, strategic control of Government, flexibility
in organizational structure, agility in decision making and
ability to hire and retain competent human resources.
In view of the sensitivity of the role of GSTN and the
information that would be available with it, the EG also
considered the issue of strategic control of Government
over GSTN. The Group recommended that strategic control
of the Government over the SPV should be ensured through
measures such as composition of the Board, mechanisms of
Special Resolution and Shareholders Agreement, induction
of Government officers on deputation, and agreements
between GSTN SPV and Governments. Also, the shareholding
pattern would ensure that the Centre individually and
States collectively are the largest stakeholders at 24.5%
each. In combination, the Government shareholding at 49%
would far exceed that of any single private institution.
EG also brought out the need to have technology
specification to run this company so that there is 100 percent matching of returns. The business knowledge resides with
the officials of Government of India and States. However,
professionals with sophisticated technology knowledge will
be required to run this company independently, similar to
NSDL which is working professionally and independently.
EG also recommended a non-government company as that
will have operational freedom.
These recommendations were presented before the
Empowered Committee of State Finance Ministers in its
3rd meeting of 2011 held on 19th August 2011 and in the
4th meeting of 2011 of the EC held on 14th Oct 2011. The
proposal of the EG on IT infrastructure for GST regarding
GSTN and formation of a non-profit section 25 company
with the strategic control with the Government were
approved by the Empowered Committee of State Finance
Ministers (EC) in its meeting held on14.10.11.
The note of Department of Revenue for setting up a Special
Purpose Vehicle to be called Goods and Services Tax
Network on the lines mentioned above was considered by
the Union Cabinet on 12th April 2012 and approved. The
Union cabinet also approved the following:
i. Suitable and willing non-government institutions
will be identified and firmed up by the Ministry
of Finance to invest in GSTN-SPV prior to its
incorporation.
ii. The strategic control of the Government over
the SPV would be ensured through measures
such as composition of the Board, mechanisms
of Special Resolution and Shareholders Agreement, induction of Government officers on
deputation, and agreements between GSTN SPV
and Governments.
iii. The Board of Directors of GSTN SPV would
comprise 14 Directors with 3 Directors from
the Centre, 3 from the States, a Chairman of the
Board of Directors appointed through a joint
approval mechanism of Centre and States, 3
Directors from private equity stake holders, 3
independent Directors who would be persons of
eminence and a CEO of the GSTN SPV selected
through an open selection process.
iv. Relaxation in relevant rules to enable deputation
of Government officers to the GSTN SPV for
exercise of strategic control and for bringing in
necessary domain expertise.
v. GSTN SPV would have a self- sustaining revenue
model, where it would be able to levy user
charges on the tax payers and the tax authorities availing services.
vi. GSTN SPV to be the exclusive national agency
responsible for delivering integrated indirect
Tax related services involving multiple tax
authorities. Accordingly, any other service
provider seeking to deliver similar integrated
services would be required to enter into a formal
arrangement with GSTN SPV for the services.
vii. A one- time non- recurring Grant- in aid of Rs.
315 crore from the Central Government towards expenditure for the initial setting up and
functioning of the SPV for a three year period
after incorporation.
In compliance of the Cabinet decision, GST Network was
registered as a not-for-profit, private limited company
under section 25 of the Companies Act, 1956 with the
following equity structure:
| Central Govt |
24.5% |
|
State Govts
|
24.5% |
|
HDFC |
10% |
|
HDFC Bank
|
10% |
|
ICICI Bank
|
10% |
|
NSE Strategic Investment Co |
10% |
|
LIC Housing Finance Ltd
|
11% |
The GSTN in its current form was created after taking
after approval of Empowered Committee of State Finance
Ministers and Union Government after due deliberations
over a long period of time.
Q 3. What services will be rendered by GSTN?
Ans. GSTN will render the following services through the
Common GST Portal:
(a) Registration (including existing taxpayer master
migration and issue of PAN based registration
number);
(b) Payment management including payment
gateways and integration with banking systems;
(c) Return filing and processing;
(d) Taxpayer management, including account
management, notifications, information, and
status tracking;
(e) Tax authority account and ledger Management;
(f) Computation of settlement (including IGST
settlement) between the Centre and States;
Clearing house for IGST;
(g) Processing and reconciliation of GST on import
and integration with EDI systems of Customs;
(h) MIS including need based information and
business intelligence;
(i) Maintenance of interfaces between the Common
GST Portal and tax administration systems;
(j) Provide training to stakeholders;
(k) Provide Analytics and Business Intelligence to
tax authorities; and
(l) Carry out research, study best practices and
provide training to the stakeholders.
Q 4. What is the interface system between GSTN
and the states/CBEC?
Ans. In GST regime, while taxpayer facing core services
of applying for registration, uploading of invoices, filing of
return, making tax payments shall be hosted by GST System,
all the statutory functions (such as approval of registration, assessment of return, conducting investigation and audit
etc.) shall be conducted by the tax authorities of States and
Central governments.
Thus, the frontend shall be provided by GSTN and the
backend modules shall be developed by states and Central
Government themselves. However 24 states (termed as Model
2 states) have asked GSTN to develop their backend modules
also. The CBEC and rest of the states (Model 1) have decided
to develop and host the back-end modules themselves.
Q 5. What will be the role of GSTN in registration?
Ans. The application for Registration will be made Online
on GST Portal.
Some of the key data like PAN, Business Constitution, Aadhaar, CIN/DIN etc. (as applicable) will be validated
online against respective agency i.e. CBDT, UID, MCA etc,
thereby ensuring minimum documentation.
The application data, supporting scanned documents
shall be sent by GSTN to states/ Centre which in turn shall
send the query, if any, approval or rejection intimation
and digitally signed registration to GSTN for eventual
download by the taxpayer.
Q 6. What is the role of Infosys in GSTN?
Ans. GSTN has engaged M/S Infosys as a single Managed
Service Provider (MSP) for the design, development,
deployment of GST system, including all application
software, tools and Infrastructure and operate & maintain
the same for a period of 5 years from Go-Live.
Q 7. What are the basic features of GST common
portal?
Ans. The GST portal shall be accessible over Internet (by
Taxpayers and their CAs/Tax Advocates etc.) and Intranet
by Tax Officials etc. The portal shall be one single common
portal for all GST related services e.g.–
i. Tax payer registration (New, surrender,
cancellation, etc.);
ii. Invoices upload, auto-drafting of Purchase
register of buyer Periodic GST Returns filing;
iii. Tax payment including integration with agency
banks;
iv. ITC and Cash Ledger and Liability Register;
v. MIS reporting for tax payers, tax officials and
other stakeholders;
vi. BI/Analytics for Tax officials..
Q 8. What is the concept of GST Eco-system?
Ans. A common GST system will provide linkage to all
State/UT Commercial Tax departments, Central Tax
authorities, Taxpayers, Banks and other stakeholders.
The eco-system consists of all stakeholders starting from
taxpayer to tax professional to tax officials to GST portal to
Banks to accounting authorities. The diagram given below
depicts the whole GST eco-system.
Q 9. What is GSP (GST Suvidha Provider)?
Ans. The GST System is being developed by Infosys, the
Managed Service Provider (MSP). The work consists of
development of GST Core System, provisioning of required
IT infrastructure to host the GST System and running and
operating the system for five years.
The proposed GST envisages all filings by taxpayers
electronically. To achieve this, the taxpayer will need tools
for uploading invoice information, matching of input
tax credit (ITC) claims, creation of party-wise ledgers,
uploading of returns, payment of taxes, signing of such
document with digital signature etc.
The GST System will have a G2B portal for taxpayers
to access the GST Systems, however, that would not be
the only way for interacting with the GST system as the
taxpayer via his choice of third party applications, which will provide all user interfaces and convenience via
desktop, mobile, other interfaces, will be able to interact
with the GST system. The third party applications will
connect with GST system via secure GST system APIs. All
such applications are expected to be developed by third
party service providers who have been given a generic
name, GST Suvidha Provider or GSP.
Taxpayers will interface with GST System via GST system
portal or via GSP ecosystem provided by way of applications
for activities such as Registration, Tax payments, Returns
filing and other information exchange with GST core
system. The GSPs will become the user agencies of the GST
system APIs and build applications and web portals as
alternate interface for the taxpayers.
Q 10. What will be the role of GST Suvidha
Providers?
Ans. The GSP developed Apps will connect with the GST
system via secure GST system APIs. Some of the functions
of GSP are:
• Development of various apps / interfaces for
taxpayer, TRPs of GST system
• Providing other value added services to the
taxpayers
The GST Suvidha Providers (GSPs) are envisaged to provide
innovative and convenient methods to taxpayers and other
stakeholders in interacting with the GST Systems from
registration of entity to uploading of invoice details to filing
of returns. Thus there will be two sets of interactions, one between the App user and the GSP and the second between
the GSP and the GST System.
Q 11. What are the benefits to taxpayers in using the
GSPs?
Ans. A GSP providing tax accounting software will have
the advantage of already providing the tax payer with
a vast majority of the taxation functionality. It will help
the tax payer if the delta process of upload of the invoice/
return and reconciliation of the same is also provided
by the GSP. Whereas in case of GST portal, another set of
exercise manually or otherwise will have to be done to
upload the invoice data or the return. The interface and
features exposed by GST portal will be uniform for all
taxpayers and might be basic in form and design. On the
other hand GSPs are expected to have richer interfaces
and features required by specific group (large taxpayers
with completely automated financial system, SME with
semi-automated system and small size with no system) of
taxpayers. Also, by sheer size the GST portal will not be as
nimble as that provided by a GSP.
GSPs can come up with application to provide GST filing
facility in existing software or develop end-to-end solution
for SME and small taxpayer to manage their sale/purchase
and GST filing e.g. an offline utility like spread sheet, which
taxpayer can fill their invoice details and then upload on
GST portal for processing. Similarly, for Tax Consultants
(TC), GSPs can provide dashboard to display list of his/her
all clients and clicking on a particular client can give TC
the snapshot of the actions/ pending actions by client. GSPs can provide innovative/value added features, which
would distinguish them with other GSPs in the market.
Source: http://www.gstn.org/ecosystem/faq_question.php
Q 12. What will be the role of taxpayers w.r.t GST
Common Portal being developed and maintained by
GSTN?
Ans. Some of the functions which will be performed by
taxpayers through GSTN are:
• Application for registration as taxpayer, and
profile management;
• Payment of taxes, including penalties and
interest;
• Uploading of Invoice data & filing returns /
annual statements;
• Status review of return/tax ledger/cash ledger.
Q 13. What will be the role of tax officers from State
and Central Govt in respect of the GST system being
developed by GSTN?